Middle-income seniors – those whose financial resources make them ineligible for government assistance, yet aren't high enough for entry into traditional private-pay seniors housing – represent a significant growth opportunity for property investors. The University of Chicago's NORC, a non-partisan research organization, defines this demographic as adults between ages 75-84 with incomes of $25,000 to $100,000 per year, and those at or over age 85 with incomes of $24,000 to $90,000.
This population is rapidly expanding, predicted to grow from 8 million seniors today to 14 million in 2029, reports Beth Mace, chief economist at the National Investment Center for Seniors Housing & Care (NIC). Mace refers to 2029 as “just the front of this demographic wave coming our way." At today's housing rates, NIC predicts that 54% of this sector is anticipated to lack adequate financial resources for private-pay senior living.
A Tiered Approach to Serve Different Needs
Investors seeking to tap into this market should be considering ways to appeal to this population. One approach is to cast a wider net, suggests Neal Raburn, a Managing Director of Seniors Housing Finance for Greystone.
“Instead of a one-size-fits-all approach, developers could offer two to three different brands under one corporate umbrella, each targeting a different price point," says Raburn, likening this to what is common in the hospitality industry. “For example, brands such as Marriot and Hilton offer a high-end, more affluent hotel, a middle-market product, as well as something for the more affordable consumer. Each has a range of services and amenities appropriate to its price point."
The multi-brand approach could offer varying levels of finishes, services and amenities to make it economically feasible for developers and operators. For example, active adult communities which require less staff and less health care, are anticipated to be in demand for the aging boomer generation. These are typically well-appointed, but may not provide the meals or high-end services typically found in today's independent living product. However, “the product in each tier should be able to support a range of needs and should be able to be met at any price point," Raburn states.
Required with re-branding is re-education. This demographic tends to hold pre-conceived – and often outdated – notions of just what seniors housing is. “Investors need to re-educate consumers: seniors housing is not just 'the nursing home' anymore," Raburn reports.
“The (current) penetration rate of seniors housing is less than 20% of qualified seniors," Raburn says. “The consumer needs to be educated that seniors housing options today, from active adult to memory care communities, are designed to engage older adults and provide appropriate care as needed, which improves their quality of life."
Aging in Place a Growing Option
A popular desire of seniors today and those of tomorrow is to remain living in their own home for as long as possible. Amber McLawhorn, Vice President of Homecare Operations at Greystone Healthcare Management, suggests that partnering with a good home health organization will go a long way in appealing to these thinkers.
“Co-branding with an on-site healthcare provider will enable you to offer different types of supportive initiatives, from those focusing on specific areas, such as cardio-pulmonary or neuro, to more general programs around maintaining wellness," says McLawhorn. “Also, 24-hour nursing access is important - having professionals on-site who can provide non-emergent care."
Finding healthcare partners is not a process to take lightly; choosing the right professionals can be significant in supporting occupancy. “Residents who develop a trusted relationship with their provider tend to stay in place," says McLawhorn, who suggests thoroughly vetting and comparing home health options, using tools such as medicare.gov.
Over time, household adjustments may become necessary in response to a resident's changing needs, such as creating flush transitions between rooms, installing grab bars, increasing fixed lighting, and more. A home health company should be able to offer an Occupational Therapist who specializes in geriatric care and is adept at assessing the client's living space.
“The expertise of the therapist is important; a knowledgeable OT can help the client make cost-effective changes," says McLawhorn, adding this may include suggestions of creative ways to re-purpose common household items or equipment, reducing overall expense.
Offering home health care not only keeps residents healthy, but offers peace of mind and security, key factors to individuals seeking to remain independent. “These steps can help keep the client out of the hospital, or from having to move into a nursing home," says McLawhorn.
Gearing up to accommodate the needs of middle market seniors will present a significant avenue for growth-minded seniors housing investors.